#HighGrowthMatters Spotlight: Early Stage Tips for Retention & Salary Ranges

In this interview with Tiffany Foo, Head of Talent at Initialized Capital, we explore how the current economic landscape has altered the talent market and discuss ways early stage companies can structure their team to ensure long-term success.

This conversation has been lightly edited for clarity and concision.

Tell me about your background and what led you to Initialized Capital.

I'm a late bloomer in tech with many career iterations. I was a teacher, then went to school to study psychology to become a therapist. During this time, I pivoted and decided I didn't want to be stuck in a room all day talking 1:1 with clients. I wanted to use my skills on a wider scale. I saw the challenges people faced in therapy also came up in the workplace. So, I saw an opportunity to help organizations create healthier workplaces for their employees. After grad school, I got a role at a consulting firm specializing in emotional intelligence for middle managers and senior leaders. That was my first exposure to startups. I had never really thought about startups before, even though I am a Bay Area native and tech is in my backyard. Despite having no background in the industry, I was determined to find a job at one. After responding to some Craigslist ads, and when one company finally took a chance on me (many applications went into the black hole of resumes before this), I interviewed and two weeks later was working in my first startup. 

I was initially hired as an operations generalist, but over the four years I was there, I became Head of People and Culture, overseeing compensation. This type of trajectory can be typical for a startup -- despite the fact that I had no background in the role and was  probably not qualified for it at the time. When I started out, I was employee 19; by the time I left four years later, there were 150+ people and I had been running the entire People Ops and Talent department alone. It was a great experience professionally, but exhausting – so when I left that role, I wanted to ensure that my quality of life wasn't significantly impacted again.

I did that four more times, each time with more experience than before. I've mostly worked for early-stage companies, helping them to grow from seed to series B. But by the fourth time, it was feeling a bit repetitive as many startups face similar growth challenges and milestones related to their culture and talent. Ultimately, this company didn't get its next round of funding, and I realized that they no longer needed me. During a candid conversation, my CEO suggested that I transition my experience to the VC side to help other companies navigate similar challenges. This idea resonated with me and so I applied to Kapor Capital, an investor in our company . What I've enjoyed most is being able to create programs and products that support multiple companies through their culture initiatives, whether it be recruiting their first 20 team members, thinking through how to grow and engage small teams, or strategizing on how to compete against all of the big companies out there for talent. And so Initialized Capital, which brings us to the present, is my second VC. In my 2nd VC tour of duty, I get to dive deeper into startup culture & team building challenges and iterate on new programs that help teams scale intentionally.

What are top priorities for you and the portfolio companies you're advising right now?

My first priority at Initialized is to create a talent network of startup-ready candidates to help early stage companies attract talent. And at the early stage, it's really hard to have brand recognition. No one knows who you are. You may be a 10 person company, a 20 person company. You may not have a lot of press because you definitely can’t afford a PR person and probably don't have a marketing person. Not to mention, founders often lack interviewing and candidate experience skills. So my goal is to bridge these gaps and create a talent pool from which our early-stage companies can draw from. 

Secondly, we're focusing on orchestrating ecosystem events to help people understand emerging tech industries such as AI and Web3. Our goal is to explain why these sectors are important to get into at this stage, and how they can have a positive impact on social good. We also highlight our portfolio companies that are making game-changing impacts in the space, in order to increase interest on the talent front for everybody.

Lastly, we want to change this hesitancy to join early-stage startups. Given the current job market and tech sector in particular, startups may not be as risky as once thought, and we want to make sure that candidates know this. Early-stage companies that have just received funding offer plenty of options, providing job security for up to two years - which is already a good amount of tenure in the tech sector.

How has ongoing economic uncertainty influenced your portfolio companies' hiring and scaling? 

There is significantly more inbound for certain companies, companies who do have some level of brand recognition, or who are just in hot sectors, like climate tech, space and web3. And not just inbound for entry or emerging junior roles, but for later stage roles as well. I think there's a huge influx of middle management, because if you look across the board at those who  were overwhelmingly represented in RIFs (reductions in force) , it's a lot of middle management. For example, we're seeing more managers across all of the various functions now on the job market. And inversely, when we look at early stage companies, most of them don't need a manager. They need hands-on ICs or talent who can both execute and own higher level strategy

I also continue to see an influx of emerging talent. People who have graduated from a bootcamp or are trying to make a pivot from another sector into the tech industry now have to compete with those who already possess two, three, four, five, six or more years of experience in the field. Whereas prior to market saturation, startups were more inclined to take on first timers. Now in this competitive landscape, startups can choose from many who have had experience with other companies.

Lastly, an interesting overlap due to pay transparency laws is that candidates coming from larger, more established companies expect larger salaries. With the introduction of new pay transparency legislation, many companies now display a salary range in their job postings. This can be disheartening for some as they may find it does not measure up to a salary range they made at their previous company. Thus, it is important for candidates to remember this before pursuing a role at an early-stage startup. They need to ask themselves if they're prepared for the realities of early stage company salary ranges and compensation.

Speaking of pay transparency legislation, what have you done to help your portfolio companies prepare to post salary ranges or file a pay data report? 

We've produced a lot of content on pay transparency and our recommendations. What many lawmakers and regulators likely didn't consider when enacting these policies are the upstream components, which can be even harder for early stage companies. To easily comply with the legislation, companies need internal compensation ranges for existing employees; this requires a leveling structure, a pay audit to make sure everyone is in alignment, a compensation philosophy, and more. However, companies that have only been operational for one year may not have the infrastructure or personnel dedicated to establishing such procedures. As a result, it's been a bit of a scramble for them to get to a place where they can confidently publish salary ranges in their job postings.

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What are other challenges you’re noticing across the board when advising your portfolio companies? 

Despite the shift to distributed remote environments due to the pandemic, there is still friction between a candidate's desire to work 100% remotely and the reality is that less than 16% of companies posting jobs on LinkedIn offer this option. The expectation from candidates is much higher - around 75%. This misalignment has led to many job seekers spending months searching for remote positions without success. But with job seekers staying on the job market for lengthier periods of time, something may have to give.

Unfortunately, I'm not sure that companies are going to be the ones who change their mind on this topic. Because of the pandemic, a lot of candidates have moved to this new way of thinking about work, and we as a work culture haven't fully caught up to that -- nor do I think we will.

What advice are you currently giving to HR leaders in your portfolio companies? 

Initialized is an early stage Seed investor. Headcount is one of the biggest expenses for an early stage company. Through a talent and people ops lens, hiring and retaining the right talent is foundational for meeting your business goals. Simultaneously, companies need to preserve their runway as later stage funding is becoming harder to come by. 

What does this mean for hiring? Salary data shows that more senior and higher titles equate to larger salaries.

I'm asking a lot of companies, "Do you really need a director level person? Do you need a VP level person in your 30 person company that is pre-revenue right now? Maybe you need a lead instead, as opposed to a director." 

The other thing I would add is that when it comes to promotions, it is best to be conservative about giving titles too early. This is especially important for early-stage companies at the A or earlier round; after securing a B round of funding is when you should bring in specialists who have experience growing a company from 10 million to who knows how many millions of dollars.  And that's oftentimes not the same person that went from zero to one with you and got your company to the first $10 million.

About Initialized Capital: 

Initialized Capital is a seed stage venture firm made up of a diverse group of founders, builders and operators who understand how hard it is to build a company. We invest in visionary founders and support them through product-market fit and beyond. With $3.2B in AUM, we are early believers in companies like Coinbase, Instacart, Flexport, Rippling and Cruise. Initialized's portfolio is worth close to $200B in market value with 28 companies valued at $1B or more.

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Lexie Sirak is a Senior Campaigns Coordinator at OpenComp and previously worked at JPMorgan Chase & Co. She pens the monthly High Growth Matters Spotlights. Connect with her on LinkedIn here.